Equinix REIT : One Decade. One Billion.

'The LATAM market' is a generalized phrase we hear a lot in business meetings and earnings calls. But the truth is, Latin America is not a market. It's many markets. Each in their own phase of maturity and growth, especially when it comes to technology adoption, cloud adoption and most importantly, Digital Transformation.

Brazil, the biggest economy in Latin America and the 12^th largest in the world[1], has the third largest video streaming user base on the planet[2]. Its economy is driven by the services industry, including financial, hospitality and IT, as well as manufacturing such as automotive, energy, and aerospace.[3]

Mexico is the second largest economy in LATAM and the 15^th largest globally[4]. It's also a rapidly growing fintech market[5] and an important entry point for global companies doing business in LATAM.

Colombia, the 4^th largest economy in LATAM, has experienced a historic economic boom over the past decade, largely driven by energy and manufacturing. It also has the fastest-growing IT industry in the world and is home to the longest fiber-optic network in LATAM.[6]

Equinix first entered LATAM in 2011 when we acquired ALOG Data Centers of Brazil. Since then, we've expanded deeper into Rio de Janeiro and São Paulo, followed by Colombia and Mexico.

This phased approach was intentional. It allowed us to carefully assess each of these unique markets, learn and adapt to cultural and business norms and develop a deep understanding of customer needs.

After ten years in LATAM-and over US$ 1 billion invested in acquisitions and expansions-we have no plans to slow down. We're now expanding further into these markets and recently, including new land and vast expansions of our IBX data centers in São Paulo, Rio de Janeiro, Bogotá, and Queretaro, which serves Mexico City.

The new spaces will have an area up to five times larger than our existing IBX data centers, providing LATAM customers with greater power, capacity, and flexibility than ever before.

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LATAM (Rapidly) Goes Digital

So what's behind the growth and investments in LATAM? Two words: Digital Transformation.

There's been a lot of discussion about Digital Transformation in the US, EMEA, and APAC, but enterprises across LATAM are also digitally transforming. This has only been accelerated by the pandemic, as more and more organizations build the infrastructure needed for a distributed and hybrid workforce. And while being less mature in their digital transformation journeys than the other regions, LATAM also has the potential for the fastest and exponential growth.

A critical ingredient for digital transformation is interconnection, which provides Equinix customers with private connectivity for data transfer between organizations. According to the Global Interconnection Index (GXI), a market study published by Equinix, interconnection bandwidth will increase at a compound rate of 50% between 2019 and 2023 in LATAM, with the bulk of this expansion coming from the metro areas of São Paulo, Rio de Janeiro, Mexico City, and Buenos Aires.

We saw this growth exemplified most recently in Brazil, where Equinix Fabric™ traffic grew by 4X in 2020. That number compares to 2X growth globally during the same period.

Business and internet traffic exchange is also growing among LATAM countries. According to TeleGeography, intra-regional traffic jumped from 5% in 2019 to 20% of the current total. The deployment of new submarine and terrestrial cables connecting countries in the region to each other and to other continents continues to contribute to this growth.

Capacity and Connections

To help customers accelerate their Digital Transformation strategies, here are some areas of recent growth, expansions, and infrastructure developments in LATAM:

• Capacity:
  • The largest of the new Equinix IBX data centers will be in São Paulo, with a land area spanning the length of more than 6 fútbol (soccer) fields.
  • Sticking with the fútbol field comparison, our new land in Rio de Janeiro is equivalent to 1.5 fútbol fields. In Queretaro, Mexico, the new land is nearly 2 fútbol fields, and our new land in Bogota, Colombia, is a little larger than 1 fútbol field.
• Connections:
  • New submarine cables for 2021 include Malbec, which connects Brazil and Argentina. This allows high-speed access to the network, cloud, content, and other service providers to reduce latency in Brazil while doubling Argentina's capacity.
  • EllaLink, the first direct connection between South America and Europe, connects São Paulo, Rio de Janeiro, and Fortaleza to Lisbon, Madrid, and Marseille. The points of presence in São Paulo, Rio de Janeiro, Madrid, and Lisbon will be within Equinix data centers.
  • In 2020, IPTP Networks, a global group of telecommunications companies, began offering a new continental route between Peru, Bolivia and Brazil. The new service is faster and guarantees 30 percent less latency than other available routes. Equinix IBX in São Paulo is ​​the point of arrival for companies on the west coast.
  • Our three recently opened IBX data centers in Mexico are fast becoming a key interconnection center for enterprises and service providers exchanging traffic in the western LATAM digital corridor, including Mexico, Dallas, and Los Angeles.
  • Brazil continues to grow as a regional hub for technology giants, housing cloud infrastructures from the likes of AWS, IBM, Google, and Microsoft. This advancement of connectivity favors businesses across LATAM.

We also recently announced agreements to add an additional $3.9 billion joint venture with our partner GIC, Singapore's sovereign wealth fund, to capture hyperscale demand and deepen cloud density across the world. When closed, this new deal will bring the total xScale data center portfolio to more than $6.9 billion across 32 data centers globally.

What does this mean for LATAM? It means we'll see the first Equinix xScale data center in the region this year, scheduled to open in Q3 in São Paulo, the largest economic and industrial center in the Southern Hemisphere. The center will connect to four existing Equinix International Business Exchange™ (IBX®) data centers.

So what will the next decade hold for Equinix in LATAM? Time will tell. But listening to our customers and staying ahead of market trends combined with the strength, resiliency and optimism of the LATAM people is weaving together a pretty intriguing story.

[1] Brazil Central Bank - Focus Economics (February 5^th, 2021)

[2] Telegeography, Datare Portal, IDC - Predictions Brazil 2021

[3]The World Bank. Services, Value Added (% of GDP) (May 17, 2021)

[4]https://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)

[5]Finnovista, Mexico exceeds the barrier of 300 Fintech startups and reinforces its position as the second most important Fintech ecosystem in Latin America, Sep 2018.

[6]World Economic Outlook Database, October 2019